Georgia-Pacific: A change for the better.

Georgia-Pacific Corp. has been at the heart of many changes in the forest products industry since its founding in 1927 as the Georgia Hardwood Lumber Company. G-P joined the pulp and paper industry 30 years later and since then has become one of the world's largest paper manufacturers and distributors. Today, its future is tied to tissue.

Companies are always changing. Underneath the uniform image they present to the public, they are continually reallocating resources, shifting people, and focusing on new goals. Sometimes, however, the change process transforms the entire company. Such is the case with Georgia-Pacific Corporation. The Atlanta-based forest products company is undergoing a bold transformation plan to aggressively develop its global consumer and away-from-home tissue business, spin off its timber business, and exit more commodity-oriented pulp and paper markets. (The consumer tissue category includes national brands sold through retailers, while away-from-home encompasses tissue products sold to businesses, schools, and other public facilities.)

The transformation has assumed a dizzying pace in recent years. Within the past four years, G-P has created The Timber Company as a standalone unit; acquired the Wisconsin Tissue operations of Chesapeake Corp.; acquired Unisource, a major paper and supply systems distributor; acquired Fort James Corp.; re-sold most of the Wisconsin Tissue operation to SCA; and reached an agreement to sell The Timber Company to Plum Creek Timber Co. To reduce debt and focus the company more closely on consumer products, G-P has sold or will sell a large share of its market pulp and chemical assets and dramatically reduce its capacity in uncoated freesheet. G-P recently announced an agreement with Canadian producer Domtar to sell four mills with capacity to produce 1.36 million annual tons of uncoated freesheet (more than half of G-P's capacity in this grade) and 555,000 annual tons or market pulp.

At the same time, G-P retains strong roots in forest products, packaging and distribution. It maintains sound environmental policies, strong management practices and industry-leading safety programs. Moreover, it has made a long-term commitment to the forest products industry. G-P has also been a leader in marketing and communications, both to the investor community and to the general public. The company's innovative approach to environmental communication has helped reposition Georgia-Pacific's public image.

For eight years, G-P has been the safest forest products company in the U.S., reporting the lowest OSHA recordable incident rate of any large forest products company. (OSHA is the Department of Labor's Occupational Safety and Health Administration.) It has also significantly increased the number of G-P facilities qualifying for OSHA's Voluntary Protection Program (see page 38).

G-P continues its strong support of pulp and paper education, voluntary industry associations, and joint pre-competitive research and development programs.

For these reasons, PIMA North American Papermaker has chosen Georgia-Pacific as its Company of the Year for 2001 (see box at left).

TIME FOR TISSUE

Of all its changes, the most significant has been Georgia-Pacific's expansion in tissue products, which has made it the world's largest producer and marketer of tissue products. G-P's tissue transition has been complex; however, the reason behind it is very simple, according to A.D. "Pete" Correll, Chairman, President and CEO of Georgia-Pacific.

"Our company has consistently outperformed the industry in return on investment, and yet the financial markets have continued to value our cash flows at less than our peers in the industry," he says. "We were doing a great job of playing the cards we had in our hand, but to do a better job for shareholders we had to change some of the cards. We were convinced that the more stable cash flows associated with moving closer to the consumer would create a valid value …